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Bond Selling like Hot Johnny Cakes Print E-mail
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Written by Administrator   
Thursday, 29 November 2012 00:00

Work on Freetown RoadThree days into the 20 million dollar Municipal Development Bond offering and the Belize City Council has all but sold out the entire subscription.


It must be that there is an extreme level of confidence in the Belize City Council under the leadership of Mayor Darrell Bradley that has attracted so much subscription for the Bond. So far, insurance companies, private individuals, the Social Security Board and financial institutions have bought the bond. While the offering has been for 3 days so far and it will last until the 24th of December, reportedly as much as 18.5 million dollars worth of Bonds have been sold. These include offerings in the three tranches, however most interest has been demonstrated for the 5 and 10-year bonds.

According to Mayor Darrell Bradley, there is still room left for other investors to come in and buy bonds. And the reason for such overwhelming  interest in the bond must be two fold. First, there is an impressive amount of confidence in the Mayor that the Council will actually use the money derived from the bond to pave streets and improve drainage across the city. Under the prospectus, there are 67 streets which have been programmed to be paved with concrete. As it is the Council, through self financing, has been able to pave 33 streets across the city.

The second reason is the attractive interest rates which the bond offers. According to the prospectus: “The bonds are being issued in Three Series. Series 1 has three tranches. The first tranche of Series 1 is an issue of $2 million that carries an interest rate of 3.5% per annum and that matures on the two-year anniversary date of the issue. The second tranche of Series 1 is an issue of $3 million that carries an interest rate of 5.5% per annum and that matures on the five-year anniversary date of the issue. The third tranche of Series 1 is an issue of $5 million that carries an interest rate of 8% per annum and that matures on the ten-year anniversary date of the issue, with a call option feature after 7.5 years. The call option gives the Council the right to call (redeem) such amounts of the bonds as it, in its sole discretion, may determine for purchase and cancellation at any time after 7.5 years after the date of issue until maturity, after giving not more than sixty days nor less than thirty days written notice to the registered holder of such bonds.

Series 2 has three tranches. The first tranche of Series 2 is an issue of $1 million that carries an interest rate of 3.5% per annum and that matures on the two-year anniversary date of the issue.

The second tranche of Series 2 is an issue of $2 million that carries an interest rate of 5.5% per annum and that matures on the five-year anniversary date of the issue. The third tranche of Series 2 is an issue of $2 million that carries an interest rate of 8% per annum and that matures on the ten-year anniversary date of the issue.

Series 3 has two tranches. The first tranche of Series 3 is an issue of $2 million that carries an interest rate of 5.5% per annum and that matures on the five-year anniversary date of the issue.

The second tranche of Series 3 is an issue of $3 million that carries an interest rate of 8% per annum and that matures on the ten-year anniversary date of the issue”.